Assessee-company was running hospital and was providing treatment to its patients. It claimed expenditure towards referral fees paid to doctors for referring their patients to assessee’s hospital . AO disallowed said expenditure alleging that it was clear violation of prohibition mandated by Indian Medical Council in terms of Explanation 1 to S. 37(1) of the Act .   CIT (A) affirmed the disallowances made by the AO . On appeal The Appellate Tribunal held that  regulation issued by Medical Council of India was applicable to doctors/medical practitioners and not for pharmaceutical companies or allied health sector industries like that of assessee . Accordingly  the expenditure on payment of referral fees to doctors could not be said to be in violation to Regulations of Indian Medical Council  . As the expenditure  was incurred wholly and exclusively for purpose of carrying on its business,  the same was allowable as deduction. (AY.  2009-10 ,  2013-14  )